The eBay of Electricity

When Jan Adams got a NZ $300 (US $247) power bill back in April 2009 she could not believe it. A tiny one-bedroom flat could not possibly consume that much electricity. New Zealand has a competitive electricity market but shifting to competing offerings looked complicated to her. She took energy-efficiency measures such as double-glazing the apartment windows, taking shorter showers, and setting the clothes washer to use cold water and expected her bil to go down. However, the following month she got another NZ $300 (US $247) bill and this time she had had enough. It didn’t matter how complicated it looked: she switched to an online electricity service provider that promised savings of 20%. “My power

Shopping for Power? - Electricity Brands (Courtesy: Powershop)

bills have gone down by at least 50%”, says Ms. Adams, who is a Customer Services Representative in Christchurch, “I’m not a techie but now I go online two or three times every week to track my power usage, to check on new discounts and savings opportunities, and to top-up my power supply. Sometimes I can even get a coupon to a local restaurant with my purchases!”

Ms. Adams’s electricity provider is Powershop, a startup company owned by Meridian Energy, the largest electricity generator and retailer in New Zealand. “The vision of Powershop is to be like eBay for electricity,” says CEO Ari Sargent. “Any electricity generator in New Zealand, including Meridian’s competitors, can offer their own brands of electricity at different prices and different seasons.”

Two years ago, when I was writing “Solar Trillions” I went to Wellington, New Zealand to learn about this new architecture of energy at work. Powershop had just launched and I got a close look. I recently talked to Mr. Sargent to check up on the company’s progress.

Powershop offers ‘sponsored’ and ‘branded’ electricity. Are you a sports fan? You can buy ‘Crusaders Rugby’-brand electricity. Concerned about Climate Change? You can buy ‘Airshed Energy’ which has ‘Certified Carbon Offset’. Just want to lock in the cheapest price for next spring? ‘Spring Power’ is on sale now.

Meridian Energy is currently the only generator selling power (under different brands) on this website. Powershop, however, is built with an open, plug-and-play architecture - more like the Internet than the traditional top-down energy architecture. “Powershop’s infrastructure was developed in anticipation of a distributed energy model,” says Mr Sargent. “As the market builds a larger number of smaller power plants like wind and solar we expect them to sell directly to consumers on our website.”

But will a distributed energy architecture emerge any time soon?

Distributed Power Architechure

The current centralized architecture of energy is one that Edison, Westinghouse, and Tesla would feel comfortable with: large power plants ‘out there’ that generate electricity and millions of smaller ratepayers consuming it. We get a monthly, sometimes undecipherable, bill, and that’s the extent of our communications with the power provider or even our understanding of our own power usage. What is emerging is a more distributed architecture where independent power producers are generating electricity from thousands or millions of smaller power plants.